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Croatian Audit Chamber: Implementation of International Auditing and Accounting Standards

The Croatian Audit Chamber (CAC) has made significant progress in implementing international auditing and accounting standards. Here are some key developments:

Audit Act (amended in 2017)

  • Regulates auditing activities and establishes mandatory audit requirements for:
    • Large companies
    • Medium-sized companies
    • Public-interest entities (PIEs)
    • Limited partnerships
    • Limited liability companies exceeding certain thresholds

International Standards on Auditing

  • The CAC has translated and adopted the International Standards on Auditing (ISA) as promulgated by the International Auditing and Assurance Standards Board (IAASB)
  • ISA have been translated into Croatian for implementation in Croatia

Code of Ethics for Professional Accountants

  • All auditors in Croatia are required to abide by the International Ethics Standards Board for Accountants (IESBA) Code of Ethics
  • The CAC has translated and adopted this code, which is mandatory for all auditors in Croatia

Public Sector Accounting Standards

The Ministry of Finance is responsible for setting public sector accounting standards in Croatia. Currently, national standards on an accrual-basis are in place, but there are no plans to adopt International Public Sector Accounting Standards (IPSAS).

Investigation and Discipline (I&D)

  • The Audit Act sets provisions for the establishment and implementation of a mandatory I&D system for all certified auditors and audit firms
  • However, this system is currently under the purview of the Ministry of Finance

Financial Reporting

Croatia has adopted International Financial Reporting Standards (IFRS) as endorsed by the European Commission. Here are some key requirements:

  • Public-interest entities must apply IFRS
  • Other companies must prepare their standalone and consolidated financial statements in accordance with Croatian Financial Reporting Standards issued by the Financial Reporting Council of the Ministry of Finance

Conclusion

Croatia has made significant progress in implementing international auditing and accounting standards, but there is still room for improvement, particularly in terms of public sector accounting standards and I&D systems.